Topic 7 - Economic Growth Flashcards
What was the only factor of production in the short and medium run
Labour
What is the formal definition of long run
There are no fixed factors of production
What happens if the level of capital per worker is above or below the steady state
The level of capital per worker will converge towards the steady state level
What allows the level of capital effective worker to converge to steady state
Negative feedback loop
what is output per effective worker in the steady state
fixed
As population growth and technological growth equal zero what happens to aggregate output
remains stagnant in the steady state
What is the marginal return for the first unit of capital per worker in the so low growth model
Very high
What about output are we concerned about in the short run
How it fluctuates around the natural rate of output
What are we concerned about regarding output in long run
How the natural rate of output grows over time
In the solow model is the economy open or closed
Closed
Is there government expenditure in the solow model
No government expenditure in the national accounts identity
What are the two main ways that economies can grow in the solow growth model
A rise in the savings rate
A rise in the growth rate of technology
How does a rise in the savings rate rate lead to economic growth in the solow growth model
Rise in the savings rate
This increases the steady state capital stock per effective worker and leads to a temporary rise in the growth rate of output
How does a rise in the growth rate of technology lead to growth of economies in the solow growth model
It decreases the steady level of capital per effective worker and increases the long term growth rate of output
What is an example of technological progress
The movement of workers from agriculture to manafacturing
